Estate planning involves more than just dividing assets among beneficiaries after death. It also includes planning for incapacity, which is the inability to make decisions for oneself due to illness or injury. Many people overlook incapacity planning when creating their estate plans, but it is just as important as other aspects of estate planning. In this blog post, we will discuss how to plan for incapacity in your estate plan.
What is incapacity planning?
Incapacity planning involves making arrangements for someone to manage your financial and medical affairs in case you become incapacitated and cannot do so yourself. These arrangements typically involve creating legal documents that specify your wishes and appoint someone to act on your behalf.
There are several legal documents you can create as part of your incapacity planning:
- Power of attorney for finances
This legal document appoints someone to manage your finances if you become incapacitated. Your agent can pay bills, manage investments, and take care of other financial matters on your behalf.
- Power of attorney for healthcare
This legal document appoints someone to make healthcare decisions for you if you are unable to do so. Your agent can make decisions about medical treatments, end-of-life care, and other healthcare matters on your behalf.
- Living will
A living will is a legal document that specifies your wishes for end-of-life care if you become terminally ill or permanently unconscious. It can include instructions about the use of life-sustaining treatments, pain management, and other medical care.
- Healthcare proxy
A healthcare proxy is a legal document that appoints someone to make healthcare decisions for you if you are unable to do so. Unlike a power of attorney for healthcare, a healthcare proxy can only make decisions about medical treatments and cannot manage other healthcare matters.
Why is incapacity planning important?
Incapacity planning is important because it ensures that your wishes are followed if you become unable to make decisions for yourself. Without incapacity planning, your family may have to go to court to appoint a guardian or conservator to manage your affairs, which can be expensive, time-consuming, and emotionally draining.
In addition, incapacity planning can give you peace of mind knowing that your affairs will be taken care of if you are unable to do so yourself. It can also prevent family disputes and disagreements about your care and finances.
How to plan for incapacity in your estate plan
Planning for incapacity in your estate plan involves creating the legal documents discussed above. Here are some steps to take:
- Find an estate planning attorney
An estate planning attorney can help you create the legal documents you need for incapacity planning. Look for an attorney with experience in estate planning and knowledge of the laws in your state.
- Choose your agents
Think carefully about who you want to appoint as your agents for financial and medical matters. Choose someone who is trustworthy, responsible, and understands your wishes.
- Discuss your wishes with your agents
Talk to your agents about your wishes for medical care and financial management. Make sure they understand your values and preferences.
- Review and update your plan regularly
It’s important to review and update your incapacity plan regularly to ensure that it still reflects your wishes and circumstances. Review your plan every few years or whenever you experience a major life change, such as a marriage, divorce, or the birth of a child.
In conclusion, incapacity planning is an important aspect of estate planning that many people overlook. By creating legal documents that appoint agents to manage your affairs, you can ensure that your wishes are followed if you become unable to make decisions for yourself. Talk to an estate planning attorney to learn more about incapacity planning and how to create an effective plan.